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Intraday commentary here: Shenanigans as Moody's Warns on US Rating.
I thought it was rather cute when Adam Johnson of Bloomberg pointed to the weaker price of gold this afternoon as proof that the Moody's warning on US credit rating is no big deal. Perception management at its finest, and most obvious.
At the same time the dollar was rolling over hard, but no one seemed to notice.
Goldman Sachs received a subpoena from the Manhattan DA, and the financial sector was pulling down stocks after yesterday's big sell off.
The equity market is looking for a reason to rally from support here. Groupon has an IPO ready to launch and the Street likes to welcome them in steady markets. Let's see if the Non-Farm Payrolls report gives them anything to cheer tomorrow.
I did take off the Financial Sector short today and yesterday from my own portfolio, and added unleveraged gold and silver holdings on the intraday smackdown today.
I do have an open mind about a meltdown in the US financial markets, but the timing seems a bit early for now, unless there is an exogenous shock.
Let's see what happens.
The big news today was the downgrades in the financial sector, with Moody's warning on three of the TBTF banks, Citi, Wells and Bank of America.
Moody's also warned the US on its sovereign credit rating, if the debt ceiling issue is not resolved.
Groupon is bringing out its IPO, giving the Street about 750 million plus reasons to support the market for the near term, and the NDX diverged today from the financially heavy SP 500. Will investors learn from their recent LinkedIn experience? If so, it could send the market and the banks into a swoon.
Non-farm payrolls tomorrow. Look for a relief rally on anything over 100,000 jobs added, and further weakness on much below that.
My suspicion is that the Wall Street wiseguys will continue to run their bluffs and play with the world markets up until the weekend over which they will fold their cards and collapse, as this did with the bankruptcy of Lehman Brothers and the beginning of the great financial crisis. The great currency crisis will be no different.
And no one will understand how it could have happened. Congress will engage in well staged histrionics, and the regulators and economists will hide in their offices.
The three big US banks, Wells, BoA, and Citi, which have just been downgraded by Moodys, may be cut down in size.
But saving JPM, the Fed's house bank, will be put forward as a national priority. And as for Goldman, well, they know where more bodies are buried than a cemetary caretaker.
Moody's also warned on the credit rating of the US today, and the metals were hit by brutal bear raids, even while the dollar slumped. Draw whatever conclusions which you may, but it looked like an exercise in perception management from here.
